2023 (6) TMI 791 - HC - Money Laundering

Jurisdiction of the Adjudicating Authority under the Prevention of Money-Laundering Act 2002 - quasi-judicial statutory authority and not a Central Agency - petitioners challenges the impugned order of the PMLA authority on the ground of coram non judice. HELD THAT - Insofar as the objection as to coram non judice is concerned there are two interpretations possible regarding the provisions of Section 6 of the PMLA - The one in favour of the petitioners is on the basis of sub-section (2) of Section 6 which stipulates that an Adjudicating Authority shall consist of a Chairperson and two other Members. The qualifications of the Members have also been provided in the proviso. Hence as per the Scheme of the Act the Adjudicating Authority has to comprise of three Members in total out of whom one will be the Chairperson. However it has been argued that at present the Adjudicating Authority is functioning only with a Chairperson without any other Member having been appointed to fill the vacancies. Thus the question of coram non judice arises - On the other hand sub-section (5)(b) provides that a Bench may be constituted by the Chairperson with one or two Members as the Chairperson of the Adjudicating Authority may deem fit. Hence it is evident that the Chairperson has the discretion even to function with only one Member which can very well be herself/himself. Proceeding on such premise the objection as to coram non judice cannot be accepted. Hence on a comprehensive interpretation of Section 6 it is clear that not only has the Chairperson the discretion to constitute a Bench with only one Member but the norm also as per Section 6(7) is that the Bench will consist of a single Member and only if the case is of a critical nature a Bench consisting of two Members will be assigned the hearing - In the present case the Chairperson as a single Member has proceeded to take up the hearing of the application under Section 17 of the PMLA which in the light of Section 6 cannot be held to be vitiated on the ground of coram non judice. Apprehension of bias - Chairperson has been proceeding in hot haste and fixed the first hearing at the office of the ED which is itself the complainant - HELD THAT - The respondents have sought to explain away such venue by arguing that the CGO Complex where the sitting was scheduled houses all the offices Central Government including the ED office. Although in the Notice it was indicated that the meeting would be held in the ED office it was held in a different Government office of the same building which was on the same floor as the ED office - That apart the petitioners counsel participated in the hearing and never took the objection as to the venue. The mere selection of the ED office as a venue in the present context in the absence of any other clinching factor to indicate bias would not vitiate the proceeding more so since the matter has not yet reached the final hearing stage - Hence it cannot be said that the Chairperson committed any jurisdictional error in himself as a single Member to entertain and proceed with the hearing of the application pending before the Authority. There is no scope of entertaining the writ petition at this stage. However in order to allay the apprehension of bias in the mind of the petitioners a further opportunity of hearing ought to be given to the petitioners before closing the hearing on the pending interim applications - Application is disposed of by directing the Adjudicating Authority to afford an opportunity of hearing to the petitioners and/or their counsel and thereafter to pass necessary orders.

Summary

Issues Involved:
1. Jurisdiction of the Court to entertain the matter.
2. Validity of the proceedings by the Adjudicating Authority under the PMLA.
3. Alleged bias and procedural irregularities by the Adjudicating Authority.

Summary:

Jurisdiction of the Court:

The Enforcement Directorate (ED) raised an objection regarding the Court's determination to take up the matter, citing a Notification dated September 30, 2022, which clarified that matters relating to CBI and Central Agencies in writ petitions under Article 226 of the Constitution are included within the special category "Police" in the Appellate Side Rules. The petitioners argued that the writ petition challenges the jurisdiction of the Adjudicating Authority under the PMLA, which is a quasi-judicial statutory authority and not a "Central Agency." The Court, referencing a Division Bench judgment and the Supreme Court's decision in Vijay Madanlal Choudhury Vs. Union of India, held that the Authorities under the PMLA are not Police Authorities and thus, the objection to jurisdiction was turned down.

Validity of the Proceedings by the Adjudicating Authority:

The petitioners challenged the impugned order of the PMLA authority on the ground of coram non judice, arguing that Section 6(2) of the PMLA mandates the Adjudicating Authority to consist of a Chairperson and two other Members. The Court noted that Section 6(5)(b) allows a Bench to be constituted by the Chairperson with one or two Members, and sub-section (7) provides for the Chairperson's discretion to constitute a Bench with only one Member. Therefore, the objection as to coram non judice was not accepted.

Alleged Bias and Procedural Irregularities:

The petitioners argued that the Adjudicating Authority showed bias by fixing the first hearing at the ED Office and not providing an opportunity to respond to a rejoinder filed by the ED. The Court found that the venue was selected for administrative convenience and that the hearing was ultimately held in a different Government office in the same building. The Court also noted that the petitioners' counsel participated in the hearing and did not object to the venue at that time. Regarding the rejoinder, the Chairperson had clarified that it would not be relied upon without giving the petitioners an opportunity to file a written objection.

The Court observed that the proceedings under Section 17(4) of the PMLA are of a summary nature and do not require detailed arguments. The repeated attempts by the petitioners to challenge the proceedings indicated an intention to stall the same unnecessarily. The Court emphasized the urgency involved in combating money-laundering and related serious crimes, justifying some amount of urgency in the proceedings.

Conclusion:

The writ petition was disposed of by directing the Adjudicating Authority to afford an opportunity of hearing to the petitioners and/or their counsel before closing the hearing on the pending interim applications. The Adjudicating Authority was also directed not to rely on the rejoinder filed by the ED unless adequate opportunity is given to the petitioners to file a written objection thereto. There was no order as to costs.